Savers turn back on property

While property values remain uncertain, the third annual Scottish Widows Savings and Investment Report reveals that the nation's view of investing in property has been impacted by the unprecedented economic environment in last couple of years. However , investors' actions do not necessarily mirror their sentiments.

The report reveals a shift in the way people view their property as a long term investment; over a third (36%) of people said owning a property this year is not as good an investment as before due to changing market conditions. Furthermore, only 8% of people who are investing for the long term chose property as their long term investment product choice. The research also indicates that people's attitudes to other saving and investment vehicles are changing, with an increase in the number of investors seeking security from investing in cash. When asked last year, a third of respondents would have chosen to invest in cash ISAs for their long-term investment needs. This year 42% of those saving have chosen a cash ISA for their long-term investment needs.

Although few homeowners view their property as a long term investment 45% of people still believe that property usually or always provides better returns than other investments, showing Brits can't shake off the sentiment of relying on property for their retirement.

Anne Young, savings expert at Scottish Widows comments: "Nobody can predict what will happen in the property market. However, savers should be cautious about relying on returns from their property as a long term investment. We have already seen many unfortunate homeowners in negative equity. It is good news that more people are choosing ISAs as their investment vehicle this year, but the number still relying on the idea that property provides better returns than other investments is alarming. Another reason that our love affair with property is potentially dangerous is that it can distract people from the benefit of diversifying into other asset classes such as traditional savings vehicles. It is important to save, even a small amount, to get into a saving habit and build up some easily accessible capital."

Nearly half of Brits (48%) still believe property is a good investment and that it will withstand an economic downturn. Confidence in the long term property market has obviously not been shaken. If anything it has strengthened as when questioned last year, only 28% believed property would withstand an economic downturn and thought that prices would continue to rise.

Anne Young continues: "There is a real need for a shift in the strong sentiment in favour of property and for people to be educated to put money aside for their future, especially if they don't currently understand how to do it or think they can't afford it. Our research has shown people need to better understand savings vehicles, and particularly the potential tax benefits. Although both the current economic and financial climates have raised the profile of the need to prepare adequately for the future, the Government and the industry must grasp the opportunity to inform and educate people as to the most appropriate way to save and invest for the long term. Many may not be able to rely on their property to provide them with security in retirement."